Even if Transitory, Higher Oil Prices Will Translate into Persistently Higher Inflation in the World

The Week Ahead: April 27–30

• The return of oil prices to levels above USD 100 per barrel highlights the scale of the challenge in restoring commodity supply in the short term. Despite the elevated inflationary risk, there is an uneasy sense of calm in markets, particularly in the United States.

• In Brazil, inflation expectations for the IPCA continue to rise but are not seen as a threat to de-anchoring, which should allow the Central Bank to maintain its gradual cycle of Selic rate cuts, at least this week.

• The dynamics of the exchange rate, with the BRL fluctuating around R$ 5, act as an important mitigator of current inflation—and may also influence expectations if projections for the exchange rate continue to be revised downward. The latest Focus survey projections point to an exchange rate of R$ 5.25 at the end of 2026, a 5% depreciation relative to the current level, with an estimated impact of +0.50 percentage points on the IPCA.

• On the data and events front, highlights include the April 2026 IPCA-15, to be released by IBGE. Pezco Economics estimates a 1.11% increase in monthly inflation, driven by rising food and fuel prices. The Copom will meet during the week, and Pezco Economics expects another 25-basis-point reduction in the Selic rate, from 14.75% to 14.50%. On the political front, the Senate is expected to hold a confirmation hearing for Jorge Messias for a seat on the Supreme Federal Court (STF).

• In the United States, Q1 2026 GDP will be released. The Federal Reserve will meet to decide on interest rates, with expectations for the target range to remain unchanged between 3.50% and 3.75%. Other central banks will also announce rate decisions, including the European Central Bank, the Bank of England, the Bank of Japan, and the Bank of Canada.

Highlights (World/Brazil): March 20, 2026 to April 24, 2026

GEOPOLITICS

The U.S. government has initiated the process to reimburse import tariffs overturned by the Supreme Court in Feb26. It is estimated that approximately USD 166 billion will be returned to American companies.

China will reduce tariffs on its imports from Africa to 0% starting in May26, covering 53 countries. In 2025, China imported USD 314.4 billion from Africa (Jan–Nov), compared to USD 295.6 billion in 2024 (Jan–Dec).

Demand for semiconductors boosted South Korea’s GDP, which grew 1.7% in Q1 2026, the highest growth rate in the past five years. This reflects a 5.1% increase in exports, particularly semiconductors.

INTERNATIONAL ECONOMY

Kevin Warsh, nominee for Chair of the Federal Reserve, advocated for adjustments at the central bank during a hearing before the U.S. Senate Banking Committee. He stated there is no commitment to cut interest rates and reaffirmed the view that ongoing transformations in supply conditions will allow for lower interest rates.

U.S. retail sales rose 1.7% in Mar26 compared to Feb26, the highest monthly growth since Mar25, driven by gasoline sales. Excluding fuel, sales increased 0.6% in the month.

POLITICS – BRAZIL

The Constitution and Justice Committee (CCJ) of the Chamber of Deputies approved the admissibility of constitutional amendments proposing a reduction of the current 44-hour workweek. A Special Committee, composed of 38 full members and an equal number of alternates, will have up to 40 sessions to debate the merits and draft the final text.

The Chamber of Deputies approved a bill establishing control rules for the purchase, sale, and transportation of gold in Brazil, ending the self-declaration model. The bill has been sent to the Senate.

ECONOMY – BRAZIL

Brazil recorded a USD 6.04 billion current account deficit in Mar26, according to the Central Bank. Over 12 months and as a percentage of GDP, the deficit increased from 2.61% to 2.71% between Feb26 and Mar26—still comfortably financed by Foreign Direct Investment, which moved from 3.24% to 3.18% over the same period.

The change in the electricity tariff flag from green to yellow in May26 will have an impact of approximately +0.11 percentage points on monthly inflation. However, it does not alter the year-end IPCA projection.

MARKETS I: EQUITIES AND COMMODITIES (April 20, 2026 to April 24, 2026)

• Despite the back-and-forth developments related to the Iran conflict, the U.S. equity market remains optimistic, reaching new record highs. The S&P 500 climbed to 7,165 points on Apr 24 (+9.8% in the month), while the Nasdaq rose to 27,303 points (+15% in the month).

• Beyond the U.S., the Nikkei has also surprised: at 59,716 points (an all-time high), up 16.9% in the month. The CSI 300 (China) increased 7.2% in the month and is just below its record level.

• The Ibovespa, on the other hand, fell 2.6% in the week. In points, it stood at 190,745, about 4% below its all-time high (198,657 points on Apr 14).

• The net inflow of foreign capital into equity markets, over 75 trading days in the year, stood at a positive R$ 64.4 billion, compared to R$ 3.2 billion in the same period of 2025. In 2026, inflows reached USD 69.1 billion by the 70th trading day.

• In a JPMorgan survey conducted in Feb26 with 53 major emerging market funds, Brazil had the highest number of “overweight” ratings (24), followed by South Korea (20) and China (11).

• Tensions in the Strait of Hormuz once again weighed on oil prices: Brent rose 16.5% in the week to USD 105.33, while WTI advanced 12.58% to USD 94.40.

• As a result, year-to-date gains as of Apr 24 reached 73.10% for Brent and 64.40% for WTI.

• Natural gas prices (Dutch TTF) rose again during the week (+15.71%), pushing year-to-date gains from 26.55% (as of Apr 17) to 59.30% (as of Apr 24).

• Gold prices fell 2.5% in the week to USD 4,709 per troy ounce, while silver declined 6.4% to USD 75.73.

• Among industrial commodities, only aluminum (+0.74%) and nickel (+4.96%) posted weekly gains, while copper prices fell 0.28%.

MARKETS II: CURRENCIES AND INTEREST RATES (April 20, 2026 to April 24, 2026)

• Brent oil prices above USD 100 and stronger-than-expected retail sales growth in Mar26 put upward pressure on 10-year government bond yields, which rose from 4.25% to 4.30%.

• In Brazil, the yield curve shifted higher across all maturities. The Jan29 contract moved from 13.14% on Apr 17 to 13.48% on Apr 24. Among the drivers were reports of electricity tariff increases of around 10%, in addition to the change in the tariff flag (from green to yellow) starting in May26.

• The upward trend in inflation expectations still prevails and represents a relevant risk to the expected path of interest rates. The Apr 17 Focus survey showed 2026 IPCA expectations at 4.80%, above the upper bound of the target (4.50%). For 2027, expectations were revised to 3.99%, approaching the uncomfortable 4% level.

• The DXY appreciated 0.44% during the week. The EUR and JPY depreciated by 0.37% and 0.47%, respectively. The GBP, on the other hand, posted a modest gain of 0.12%. On the month, the DXY still shows a depreciation of over 1%.

• The BRL remained stable at R$ 4.98. During the week, it appreciated to R$ 4.96, the strongest level since early Mar24, and remains among the best-performing emerging market currencies year-to-date (up 9%).

• Corporate debt issuance in foreign currency by Brazilian companies totaled USD 19 billion in 2026 through Apr 17, slightly below the USD 34 billion issued over the 12 months of 2025.

• The 21-day moving average of FX flows stood at negative USD 5.4 billion as of Apr 17. The trade balance component declined from USD 5.6 billion to USD 4.7 billion, while the financial flow moved from USD -8.3 billion to USD -10.2 billion over the period.